Agenda item

Report of the Executive Director of Growth, Planning and Housing

7.1       The Committee received a report on the Housing Investment Strategy and thirty-year Housing Revenue Account (HRA) Business Plan. This was the fifth such plan since the introduction of self-financing in 2012.  The City Council’s investment plans are ambitious and will deliver a range of lasting benefits for the City, its residents and the City Council.  They will allow the City Council to realise much of its ‘City for All’ ambitions of aspiration and choice; delivering new homes and leveraging the value of our land assets to bring forward investment in some of Westminster’s poorer neighbourhoods.

7.2       The Director of Housing and Regeneration highlighted the main changes from last year’s which would see an accelerated and increased borrowing to facilitate housing regeneration which will peak in year 7 to £334m reaching the HRA debt cap while reserves will reduce to around a minimum level of c £11m for 20 years. 

7.3       Barbara Brownlee explained that the base business plan uses prudent assumptions so that risk is minimised.  As the HRA headroom and financial capacity is fully utilised by the increase in the proposed capital programme over the immediate planning period the ability of the HRA to absorb and manage risk is reduced as HRA reserves will be at minimal levels.  This means that if any overspends occur or capital receipts are delayed or reduced this would necessitate mitigation through a range of management actions such as either reducing, reprofiling or stopping expenditure on the capital programme or realising funds through the disposal of HRA assets as the HRA is legally unable to run deficits.  The potential impact of risk factors requires a strong risk mitigation strategy that can be quickly adopted if any of the risks materialise.  A table summarising identified potential risks was set out in the committee report.

7.4       The Committee asked Ms Brownlee how confident the Council was in the assumptions of future rental income as well as about the monitoring of potential risks.  She stated that officers were fairly confident about the assumptions around dwelling rents.  She advised that if the assumed government rent policy turnout to be incorrect then management would this revise the business plan.  With regards to monitoring, she explained that quarterly governance meetings are held between senior officers and elected officials at which program performance is reviewed and risks monitored.  The business plan is reviewed annually starting in October as part of the budget setting process.

7.5       Members noted with concern that management costs will account for 46% of total annual expenditure in 2017/18.  Ms Brownlee advised that an independent review of CWH in 2015 highlighted that management costs were in the top quartile compared with similar housing providers.  A target was set for the organisation to reduce these costs by £5m over 5 years so these fall within the median quartile.

7.6       Ms Brownlee was asked about the use of the HRA to build and purchase property outside of the borough when there are still opportunities to provide housing in the city through infill housing and further regeneration.  She stated that the business plan does include links to proposals for the range of in-borough housing delivery referred to.  She advised that the Council was aiming to be ambitious on delivering infill housing and was looking at more modern methods of construction to facilitate development as well as more efficient procurement to speed up delivery.  The Cabinet Member for Housing further advised that the Council was undertaking a borough wide analysis of infill opportunities.  However, while there were many opportunities that the Council wanted to explore in-borough as one of the most intensively developed places in the United Kingdom Westminster does not have the space to meet all its housing needs.

7.7       ACTIONS: In light of the proposed borrowing commitment which will utilise all of the foreseeable headroom and financial capacity within the HRA the committee would like to include a regular update on the delivery of the HRA Business Plan to its work programme.